Don’t Keep Your Beneficiaries Sitting At a Red Light

I have heard people comment that they do not need to plan their estate because they do not have enough money. My response to them is, “If you have a car, you have an estate.” I say this good-naturedly and without too much of an ominous tone, but I could not be more serious.

If you have a car, you have something titled in your name that your loved one is going to have to figure out how to transfer into someone else’s name. If they do not have the correct paperwork, this will probably involve multiple trips to the courthouse and to the Department of Motor Vehicles. In the initial consult with someone who has lost a loved one, I often cringe when asking the question, “Did they own a car?”

My next question is always, “Do you know where the title is?” Your car title should be kept in the same place you keep all of your important documents. If your survivor has to request a duplicate title, the process of transferring the title is more arduous, especially if the intention is simply to sell the car and not transfer it to a beneficiary.

I then warn the family that no one should be driving the car until the title has been properly transferred. Here, I try to instill some fear in my listener. Often family members, especially those from out-of-town, will use the car while visiting and making funeral arrangements. This can be incredibly risky for the estate. It leaves the estate open to law suits and thereby the assets of the estate are vulnerable if the driver gets into an accident for which insurance policies do not cover the damages.

Because transferring the car title has been so difficult in the past, I now provide my clients with a comprehensive packet. My goal is for them to be able to take the packet directly to their local DMV, present the packet, and never have to go back again. Within the packet is a minimum of five DMV forms I know they will need, depending on the circumstances. One of these forms is an exemption from paying the Highway Use Tax, which is a tax based on the value of the The major changes will be in parsing and in the logic behind operating the data. vehicle that is levied for every title transfer. Cars passing by will or intestacy are exempt from this tax because they are gifts. I have found it easiest to avoid this tax if it is highlighted for the DMV clerk assisting in the transfer; otherwise, this fee is often paid in error.

Married couples, especially, should take note here, although this applies to all people who hold title to a vehicle with someone else. Just because you are married does not mean that the survivor owns the car following the death of the spouse, even if both of your names are on the title.

There is a way to title the car between two people “with right of survivorship,” but the acronym JWROS must be on the car title. If it is not and your names are simply listed, then you each own 50% of the car with no right of survivorship to the other half. I have had countless spouses walk in our office assuming everything was held jointly with the other only to find out that they still had to open a probate at the courthouse to transfer a one-half interest in a car. The vast majority of titles are not held with right of survivorship as it is something you must designate specifically, and the option is rarely presented at purchase.

There are other situations to consider, such as whether before you die to transfer title to a trust if you have one (probably best not to for liability reasons), or whether your loved one can use an abbreviated probate procedure if the car is worth less than a certain value. In the end, when someone dies who owned a car, the best advice is to consult with a probate attorney before heading to the DMV. You may still stand in a long line, but hopefully you will only do so once.

Originally published in Southern Neighbor, August 2013

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